Part time employee

[Drop the frog]

Hi all

I'm thinking of taking on a part time employee only for 5 hours on a Saturday, my question is do I need to register as an employer or just keep records?

Cheers

 

[Newchodge]

Do you have any other employees, including yourself?

 

[Drop the frog]

Hi

Just a sole trader at the moment

 

[Newchodge]

In that case, unless you are paying them a small fortune per hour, so their income is above the national insurance threshold, you would only have to register as an employer if the person you take on has another job.

 

[puffin]

Does the same apply if in a partnership?
How does the NI PAYE work? Or does that only come into play when employed.

Thanks

 

[Newchodge]

As a sole trader or in a partnership you have to register with HMRC. You pay class 2 NI contributions and then declare your income/expenses as self employed, and pay tax on the profit.

PAYE only applies to employees.

If you are a limited company the company can employ you and put your income through payroll.

 

[markrobin]

Hi,
In my opinion if your employer is for long time then you need to register and he is for not long time then just keep records is a best potion.

 

[vividbusiness]

Employees, PAYE, Payroll are all complex additions to your business which Ia m sure you do not have time or inclination for.

Why not take on an employee as someone who is self employed themselves or as free lance?

Just get them to sign a disclaimer that they will register and have registered with HMRC as self employed and then they invoice you each month or week for the amount of hours they have worked and the cost and you pay them that.

It is up to them then to pay their own NI and Tax, you will just use the INVOICE as an expense in your tax return?


Good luck, your business must be expanding and developing if you are looking at employing - well done

If you need anything more tweet me

Regards

Sean Paul
Business Coach
Vivid Business Solutions
@sean_bus

 

[Newchodge]

It is not a good idea to employ someone on a self employed basis. the clue is in the word employ.

HMRC have severe penalties for this practice. Whether someone is self employed is not a question of getting them to say so and pay their own tax. There are fairly clear definitions. Have a look here.

http://www.hmrc.gov.uk/employment-status/index.htm

 

[vividbusiness]

Newchodge I still see the word employ in both self employed and employee, HMRC of course are going to say that as they want to ensure everyone is paying tax correctly.

As long as you explain to the person (employee) that the role is self employed and you have clear working terms and conditions and they register with HMRC it WONT be a problem!

If you were going to employ someone for longer than 5 hours and multiple people I would recommend that you do register as an employer.

You will also need to check that you have employees Liability insurance too.

Regards

Sean Paul
Senior Business Consultant
Vivid Business Solutions
@sean_bus

 

[Newchodge]

It's possible that it won't be a problem but it will be illegal.

 

[Scalloway]

It can be expensive if HMRC inspect you and confirm that the "self employed" people are indeed employees. You'll be liable for the tax that should have been deducted on grossed up payments.

 

[BustersDogs]

I didn't register as an employer until I took on a 5th employee, as they were all part timers and not earning enough, which took about 18 months. Within 6 months some of them went over the threshold anyway, but until then I just had to keep telling the tax man that they hadn't earned enough money for PAYE to be paid. Which I found really frustrating and annoying!

 

[Employer Labour Relations]

In my opinion, if you are just hiring someone for 5 hours that too for one day in a week, you don't need to register for this. All you have to do is to keep record of the work.

 

[Newchodge]

In my opinion, if you are just hiring someone for 5 hours that too for one day in a week, you don't need to register for this. All you have to do is to keep record of the work.

That is what I said in post 4!

 

[kevin.doran]

From 6th April under RTI you will have to register as an employer, no matter how much is being paid, as well as making an electronic submission to HMRC each payrun.

 

[Newchodge]

Rats. I understood originally that if you only had employees below the NI threshold and who weren't on BR tax code, that you did not have to use RTI, but if you had any employees above the threshold or who paid any tax, you had to use RTI for all of them.

Have I got this wrong?

 

[kevin.doran]

I thought RTI would change this up but it looks like I stand corrected. Taken from another forum:

'You do not have to register as an employer providing the staff are paid below the threshold, do not have another job, do not receive benefits and do not receive a pension or any other type of income.

The only time an employer has to include staff who are either temporary or in your case Saturday workers is if they are already registered as an employer and have other staff that are paid over the threshold and the business already pays PAYE & NI.

However, in your scenario the 'employer' still has to have a P46 completed and kept on file and also proof of identity which can either be a birth certificate, passport or driving licence (both copies)'

I'm sure Tom Mc will be along shortly to clarify but apologies for my initial comment if incorrect.

 

[WJP]

As long as you explain to the person (employee) that the role is self employed and you have clear working terms and conditions and they register with HMRC it WONT be a problem!

It's not up to you whether they're employed or self-employed, it's up to HMRC and the tests they apply. You can "explain...that the role is self employed" all you like, but if it meets the criteria for employment that HMRC lay down then be ready for the repercussions.

 

[Jeff FV]

Hi Folks

Just an admin note to let you know I've moved this to the "Employment & HR" forum.

Best wishes

J

 

[kulture]

Vividbusiness, your advice is dangerously WRONG. Look at http://www.hmrc.gov.uk/employment-status/index.htm#1 regarding the definition of employed or self employed. If a person is employed on a self employed basis and does not pass the criteria, then the employer is liable for all the back taxes and NI. It is not a good idea to give employed/self employed advice without checking what the job entails, not just the number of hours involved.

 

[10032012]

Hi all

I'm thinking of taking on a part time employee only for 5 hours on a Saturday, my question is do I need to register as an employer or just keep records?

Cheers

I have to be honest with you. Is there not any more hours you could give? As the number of hours are so low you risk an employee just resigning at no notice leaving you in limbo.

 

[tonitarzan]

Most businesses do that, they employ people part time, for like 16 hours and stuff.. I think this is something to do with less tax they pay.

 

[Lentinus]

Briefly mentioned by another poster but in case you missed it - dont forget EMPLOYERS LIABILITY INSURANCE!
You don't need it when it is just you, but the moment you employ someone (and even though they maybe self employed for tax purposes they may not be for HSE purposes) you do need it : details here http://www.hse.gov.uk/pubns/hse40.pdf

Just one of the many reasons small businesses don't hire more people!

 

[vividbusiness]

Kulture,

I followed your link and read over again the HMRC advise, just wanted to point out the following from that link:

In order to answer this question it is necessary to determine whether the person works under a contract of service (employees) or under a contract for services (self-employed, independent contractor). For tax and NICs purposes, there is no statutory definition of a contract of service or of a contract for services.

It then goes on to say ...

As a general guide as to whether a worker is an employee or self-employed; if the answer is 'Yes' to all of the following questions, then the worker is probably an employee:

Do they have to do the work themselves?
Can someone tell them at any time what to do, where to carry out the work or when and how to do it?
Can they work a set amount of hours?
Can someone move them from task to task?
Are they paid by the hour, week, or month?
Can they get overtime pay or bonus payment?

Looking at this I understand neither of us to be right or wrong ... taking each point

Do they have to do the work themselves?

- well I certainly do not intend to help the plumber unblock my drains.

Can someone tell them at any time what to do, where to carry out the work or when and how to do it?

- I'm sure we all tell the tradesman/ painter decorator what time we want them, what to do, where to carry out the work!

Can they work a set amount of hours?

- There are only 24 Hours in a day

Can someone move them from task to task?

- Yes once you have finished with that leaky tap could you just check on the toilet flusher?

Are they paid by the hour, week, or month?

- I do believe we are all paid when we work, unless it is voluntary then that is neither self employed or an employee (but you are still classified as an employee for insurance)

Can they get overtime pay or bonus payment?

- I do believe most self employed people also get tips, they charge extra for running over!

Just my thoughts and understandings and My opinion?

Sean Paul
Business Coach
Vivid Business Solutions
@sean_bus

 

[Scalloway]

Quote:

Do they have to do the work themselves?
- well I certainly do not intend to help the plumber unblock my drains.

Yes but the plumber can send his apprentice when something else comes up that needs his attention

Quote:

Can they work a set amount of hours?
- There are only 24 Hours in a day

But you would be annoyed if the plumber insisted in staying for 8 houirs because he had nothing else to do and insisted you pay him for it

Quote:

Can someone move them from task to task?
- Yes once you have finished with that leaky tap could you just check on the toilet flusher?

Presumably you insist he switches off his mobile phone when he comes in so he can't go away when another job comes up elsewhere

Quote:

Are they paid by the hour, week, or month?
- I do believe we are all paid when we work, unless it is voluntary then that is neither self employed or an employee (but you are still classified as an employee for insurance)

So he can't give you an invoice that just says "plumbing repairs"

 

[WJP]

Vividbusiness, your advice is dangerously WRONG

And more than a little worrying from someone calling themselves a business coach...that kind of thing should be fairly basic knowledge, no?

 

[vividbusiness]

Wjp

I did not realise the Forum was about putting other professions down?, I think you need to see my post above?

Regards

Sean Paul
Business Coach
Vivid Business
@sean_bus

 

[Scalloway]

If you really want to argue about employment v self employment I suggest that you take it up with HMRC. They set the rules.

I don't know your experience with this particular issue but it is something employment specialists and accountants do have to advise on. It's expensive when you have HMRC do an inspection and insist you pay the tax and NI on the grossed up amounts paid to so called self employed people.

 

[WJP]

I did not realise the Forum was about putting other professions down?

It's not, but I'm surprised that someone professing to be a business coach would lack what is basic business knowledge.